Hospitality among S.C. industries still feeling worker shortage crunch

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By Christina Lee Knauss 

The popular Midlands restaurant chain Lizard’s Thicket closed its Beltline Boulevard location in recent weeks. There’s nothing wrong with the building and the chain isn’t giving up on the location — it’s a temporary shutdown because there isn’t enough staff to keep it open.  

The locally owned chain joins many restaurants around the state in facing a labor shortage, happening despite recent statistics that show the unemployment rate in South Carolina falling overall and the hiring rate in many industries, including leisure and hospitality, increasing.  

Ending a statewide labor shortage was a goal of S.C. Gov. Henry McMaster’s directive to end federal pandemic unemployment benefits starting June 26. South Carolina was one of 26 states to withdraw federal benefits before they ended nationwide on Sept. 6. While some industries, hospitality in particular, have seen employment numbers increase, they are still not attracting enough workers to operate at normal, pre-pandemic levels.  

“The hospitality sector was experiencing staffing challenges before the pandemic began, and COVID-19 exacerbated the problem,” said Duane Parrish, director of the South Carolina Department of Parks, Recreation & Tourism. “When restaurants and hotels had to make decisions to close temporarily or reduce services during the height of the pandemic, many hospitality employees lost their jobs and found new work in other industries. South Carolina tourism has exceeded expectations this summer, which has helped propel our recovery, but the labor shortage in hospitality continues to be a real challenge.” 

The most recent data available from the South Carolina Department of Employment and Workforce showed a dip in the state’s unemployment rate from 4.5% in June to 4.3.% in July, below the national unemployment rate of 5.4%. According to DEW’s monthly household survey, July saw an increase of 10,217 employed people from the June estimate and an increase of 55,704 more people working this year than in July 2020.  

“July was one of the best jobs reports the state has had since last year,” said Erica Von Nessen, an economist with DEW. “Between June and July, that’s the highest month-over-month growth rate since last August, and more than half of the new jobs added were in the leisure and hospitality sector.  

“Now that people are vaccinated, more people are feeling comfortable going back to work, and with schools opening. there are more parents who can move back into the workforce.” 

Von Nessen said it’s still too early to determine whether the increase in people returning to work was affected by the state’s early ending of federal unemployment benefits. A paper published last month by economists and researchers at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto found that while states that withdrew from federal programs in June saw slightly higher job growth through early August, they also saw a $2 billion drop in household spending.  

Seven of eight people who saw benefits reduced or eliminated did not find employment, according to the paper, which used anonymized bank account data from financial services company Earmin to track 18,648 who were receiving unemployment benefits in late April.  Researchers compared individuals in 19 states that withdrew benefits in June against those in 23 that did not. 

Von Nessen also acknowledged that even though the hospitality sector added jobs in July, it is still one of the industries struggling the hardest to return to normal after the pandemic.  

Other industries hit hard by COVID-19 were retail and the catch-all category “other services,” which includes dry cleaners, barbers, cosmetologists and other businesses offering in-person services. Von Nessen said the “other services” sector has recovered about 95% of jobs lost to the pandemic, while leisure and hospitality has recovered about 90%.  

South Carolina is also still facing labor shortages in construction and manufacturing, but those shortages existed pre-pandemic and were only made worse by COVID-19, Von Nessen said.  

“These are relatively high-paid industries with high skills requirements, and they’re having to get really creative to attract employees,” Von Nessen said. She said some companies are offering training to help employees get the skills they need, while others are offering more flexible shifts and other incentives to fill employment rosters.  

Creativity is also key in the hospitality sector. The industry is trying everything from social media recruiting to virtual and in-person job fairs to attract workers. National chains such as McDonald’s and Bojangles, among others, have made headlines for raising wages and creating other financial incentives for new hires, and South Carolina restaurants are no different.  

Restaurants along the Grand Strand have tried raising wages and offering a wide variety of incentives to bring in more workers while tourism boomed this summer, according to Stephen Greene, president and CEO of the Myrtle Beach Area Hospitality Association. He said the area faced a labor shortage on two fronts: a shortage of locals applying for jobs as well as a pandemic-fueled sharp drop in the number of seasonal foreign workers. Some restaurants had to cut back hours or close on certain days because of the shortage. 

“We’re seeing all-hands-on-deck trying to get the work done — restaurant owners doing the cooking and workers from all departments at hotels filling in to clean rooms,” Greene said. “Among the incentives, we even had one restaurant that put new employees’ names in a drawing for a trip to Hawaii if they worked a certain amount of time. We’ve had a wonderful tourism year, but it could have been better if workers had been at 100% capacity.”  

Parrish at PRT said the labor shortage also forces the hospitality sector to change daily operations to adapt. Some hotels have stopped offering daily cleaning services because of a lack of housekeepers, and others are moving toward keyless room entry so guests will be able to skip the check-in desk. Restaurants might ask for online reservations in advance so they know exactly how many people to expect each night, and others aren’t filling every open table so they can maximize available staff. 

Lizard’s Thicket is more than 100 employees short and has a referral bonus in place among other incentives, said Sara Krisnow, community relations manager for the chain. 

“If one of our current employees refers a friend who gets hired, they will receive $200 after that new employee works 100 hours,” Krisnow said. “New employees also will receive a $200 bonus after they complete 100 hours. We are trying everything that we know to do to get people to come work. People are back out enjoying their time in our dining rooms and at the drive-through. Now we just need the workers.” 

This article first appeared in the Sept. 13 print edition of the Columbia Regional Business Report.